As global demand for sustainable products ramps up, local exporters are poised to benefit from the growing market of environmental goods and services (ESG), according to the International Trade Center (ITC).

In a report, the ITC said there is an increasing demand for products and services that support climate mitigation and adaptation.

It, however, noted that countries that have the capacity to supply these goods must have considerable investment in technology and infrastructure to produce and export green goods competitively.

As an archipelagic nation located along the typhoon belt in the Pacific Ocean, the Philippines is exerting more effort to mitigate climate change given its vulnerability to severe climate conditions.

The World Bank previously estimated that economic damage from climate change could reduce the country’s gross domestic product (GDP) by as much as 7.6 percent by 2030.

The growing market of ESG is seen to safeguard the country’s economy from what is expected to be a decline in carbon-intensive manufacturing, according to the ITC.

ESG refers to goods and services designed to measure, prevent, limit, minimize, or correct environmental damage to water, air, and soil, as well as issues related to waste, noise, and ecosystems.

The World Economic Forum estimates that ESG, as a share of total manufactured goods trade, could reach 15 percent in 2030, up from 11 percent in 2022.

The report stated that traditional exports may face stricter environmental regulations with the emergence of green goods, meaning production costs are higher while market access is more limited.

Philippine exporters can tap into this market through the circular economy—a production model that focuses on extending the life cycle of materials and products through sharing, leasing, reusing, repairing, refurbishing, and recycling for as long as possible.

The ICT said the circular economy offers growth opportunities in areas such as plastic and electronic waste management, food, tourism, and textiles, among others.

For instance, it noted that the country could develop its clothing industry to align with circular economy requirements on product reparability, upgradability, durability and recyclability.

“By integrating these principles into design and production processes, the sector can position itself competitively in global markets, where national regulators and private firms are increasingly demanding circularity,” the report read.

“Exploring trade-related standards and regulations that would support the circular economy in the region is key to open export opportunities and circular production models in the Philippine economy,” it added.

The report has recommended that the government should consider supporting businesses to adopt circular business models rooted in international standards to cultivate their export preparedness.

Further, the ICT stated that the country could leverage its natural resources, such as geothermal reserves, high solar irradiance, and wind energy potential, to expand its renewable energy sector.

Renewable energy is a critical aspect for ESG as it allows companies to manufacture products sustainably, providing them a competitive edge on the green market.

“Aligning with international environmental standards and certifications could make Philippine goods more attractive to environmentally conscious global consumers, thereby opening new markets and strengthening the country’s competitive edge in the global economy,” the ICT said.

“By focusing on green competitiveness and aligning its export strategies with global sustainability trends, the Philippines can strengthen its position in the growing green market globally,” it continued.